Dropshipping, as we already explained in this post, is quite popular nowadays. It is the easiest way to launch an online store because of its many advantages (less capital, easy to start, no stock needed, and so on).
However, in order for dropshipping to work, one of the key elements that you need to choose very carefully is the supplier or dropshipper.
Just as a bad supplier can destroy all the hard work and credibility that you have achieved, a good one will multiply your shop’s value.
However, finding online dropshipping suppliers is not an easy task . Sometimes it can even become an impossible one.
Don’t worry, in this post we’re going to explain everything you need to know to find that ideal supplier and the most important aspects you need to agree upon.
Let’s go find suppliers!
When should you look for the supplier?
Two situations can occur:
- You are looking for both a product and a supplier.
- You have already decided on the product and you are just looking for the supplier.
Let’s analyze them both.
1. In search of the lost idea
In this initial situation, you still need to choose the product and the supplier. Not to worry—we suggest doing it at the same time.
Later on, we will tell you about a few websites that function essentially as supplier directories, but before that, start out searching on your own.
Go around town and look for offline businesses that have not yet made the jump to the online world yet. Consider whether people would buy from them online or not and create a list of ideas.
When you find one good idea, and before you do anything else, ask the business about the possibility of selling its products online for a commission.
If it is a business with no online presence, the term ‘dropshipping’ will mean nothing to them. Introduce the idea by explaining it as if you were speaking to a kid.
You can show them a screenshot of a possible website (you don’t need to actually create it), and listen to their opinion.
It is not always possible, but it is advisable that your dropshipper not be located too far from you. After all, it is a key partner in your business and it’s better to know them in person, don’t you think?
Follow this process with the top 4 or 5 ideas you had and once you have made the first contact with suppliers, you will have different reasons to help you decide.
2. Searching for a supplier for a specific product
It could also be the case that you already have a good idea—a product with growing demand, few competitors, and a good margin.
Building the product from scratch is a long, expensive, and risky process (especially if you haven’t validated the business idea).
However, dropshipping is a good choice because it allows you to validate your ideas with minimal risk. This is the great advantage of selling without stock.
Therefore, what you need to do now is find companies that make the product you want to sell. You have to find them, make a list of them, and start analyzing the pros and cons before you choose one.
Let’s see how you can do that.
What makes a dropshipper better or worse?
There are thousands of factors that can endanger your reputation and brand image.
If you work with your own product, almost everything depends on you. There will always be tasks that depend on third parties, such as shipping, but almost everything else will be your responsibility.
Dropshipping is not like that.
This is why you have to be extra careful when choosing one, your reputation depends on the supplier, who both stores and ships the product that you sell.
Let’s see what positive and negative aspects you need to consider when choosing the supplier:
- Professionalism: This is quite a broad concept, but surely you grasp it. Dropshipping is a professional relationship in which there are several agreements that must be upheld. Don’t entrust your business’ credibility to the first person that makes you an offer.
- Punctuality: This is implied within the professionalism concept, but it deserves to be highlighted because of its importance related to shipping. The shipping times must be established and, more importantly, met.
- Proximity: This is not compulsory, but it is advisable. That is why when we talked about looking for ideas, we mentioned looking for a nearby business. Knowing your supplier in person is a very good practice. If they are located far away but the business is working well, think about the idea of a taking a trip to get to know where your products are being made.
- Competitors: If your supplier is the same one as the one supplying for the another 14 e-commerce businesses in your niche, it’s going to be difficult to differentiate yourself and position your business’ brand.
- Rigor and contract: Crystal clear accounts can save friendship. A good dropshipper will ask for a contract and some conditions to be met. And you should do the same (don’t worry, we’ll talk about the contract later).
It may seem difficult to find one that meets all these requirements, but they do exist—and there are plenty of them. Actually, most of them are not working as dropshippers, so go find them!
How to negotiate with a dropshipping supplier
Here you have a list of 7 good practices that will make your negotiation process with a dropshipper an easier one. ;)
1. Who are you?
Again, we encounter two different possible situations:
- You already have a shop.
- You are starting from scratch.
Let’s take a look at each case.
A. Negotiating from a power position
This is a privileged situation that eases the process of getting favorable agreements. It is about not starting out with nothing to offer, but rather with a project that is already working and that already has potential buyers.
Let’s use a real case that we know very well as an example: an e-commerce selling backpacks that started as a review website analyzing different models and brands.
Once the website started to gain visitors (about a 100 a day), it started to change the business model to affiliate marketing.
Affiliate marketing is a model that we explained in this article about the different options for selling without stock and it is an easy way to start an online shop. It does have several disadvantages, but it is perfect for validating ideas.
Instead of selling products, this e-commerce redirects the traffic to Amazon for a small commission.
Then, they reached that moment of looking for a supplier in order to change the business model from affiliate marketing to dropshipping.
You can imagine how easy it is to negotiate with someone when you show them the Analytics of a website that is already positioned for the products they are selling.
When your website is positioned and you have traffic, you are definitely the home team.
It’s easy to understand that the agreement will benefit both sides. The seller will increase their commissions and the dropshipper gains access to clients that were previously unreachable.
B. Starting from scratch, without a website or positioning
The opposite situation is when you have to negotiate without having anything to show. You can promise lots of sales, but you have nothing to prove it like in the previous case.
The dropshipper will have to take your word for it. In an online sales scenario, assuring future sales is nearly impossible.
A very common mistake is trying to negotiate good commissions without having traffic to your website. If this is your case, introduce yourself in a humble way and don’t pretend to be what you are not or promise what you can’t deliver.
We are not going to lie to you—starting an e-commerce is difficult and takes both time and effort. Dropshipping is no exception, but by doing things properly, you will see results before you know it.
2. Keep everything legal
It will be difficult for suppliers to sell you their products if your business is not registered one way or another.
If your online store is not registered nor are you, as a professional freelancer, it would be almost impossible to find anybody.
What type of contract should you sign with a dropshipping supplier?
These are the essential aspects you need to include in the contract:
- Communication: How are you going to inform them about the orders? How long will they take to confirm the reception of the order? Don’t leave any loose ends at the beginning.
- Commission: This is what people talk about the most. What percentage are you going to get from every sale? Bear in mind that affiliate marketing pays up to 10% and it doesn’t handle customer service. We don’t recommend anything below 15%, although it will depend on the price. For those products with low prices, nothing less than 25-30%. You need to defend and value your work as a seller.
- Payment periods: You need to establish the payment methods and dates. The usual thing to do is for dropshippers to issue invoices with a discount corresponding to the commission. Also, bear in mind return periods—don’t risk it and don’t pay the supplier if the client can still return the product. If you work with foreign suppliers, be careful with currencies and exchange rates.
- Responsibility regime: This includes returns and guarantees. The contract should specify what happens when clients return products, who assumes the expenses, and who deals with the second shipping when needed. By law, there is a 2-year guarantee from the maker. In that case, both of you are responsible and you need to establish it clearly in the contract.
- Shipping: When selling the products, you promise to send them within a period of time and in a certain condition. Dropshippers should comply with these dates and send the products in the agreed upon condition.
- Compensations: If the established clauses are not complied with, the contract should establish the possible consequences.
Signing this contract is essential. It will outline the rules guiding your professional relationship and it will increase the probability of having a positive relationship.
3. Beware of who you talk to
Just because an online supplier wants to work with you does not mean that they are the right fit. There are a lot of retailers, agents, and wholesalers out there who will try to deceive you to get an unrightful commission.
They are easy to spot: if they ask for an ongoing commission or a monthly fee in exchange for the supplies, stay away from them.
4. Use supplier directories
There are a lot of directories which include different companies throughout the world that provide goods to shops in hundreds of countries.
It does not matter in which country you are trying to establish your shop, whether it be in Spain, the United States, Russia, or elsewhere.
These directories normally charge a small commission to allow you to use their data. Think about it as an investment rather than a cost since they will save you a lot of time.
The following are some of the most well known online directories:
Before contacting them, learn about the company, read reviews, visit their website, and think about how difficult getting into the market would be.
5. Take advantage of Google
There are a lot of suppliers that are not included in these directories. That is what Google is for, isn’t it? Search for the kind of product you want to sell and analyze the different shops that sell them.
You will have to do some heavy searching because a lot of retailers will appear in the first positions before the suppliers. Most wholesalers do not care much about e-marketing or advertisement, therefore they do not care about SEO.
This is why your ideal provider may appear in the 15th page.
Do not take into account their website design either as they do not always pay much attention to detail and their websites may seem to be from the 90s. To sum up, you will have to do some heavy searching and then filter the results . It will not be easy, but you will end up finding someone (although they may be on page 20).
6. Hack the competition
Let’s say that you want to launch a football t-shirts store and you cannot find a good supplier. However, you’ve heard that a certain shop has really good reviews and you know that it is a dropshipping kind of store.
Clear as day.
You just need to find out who the provider is.
There is a trick that can help you figure that out. Order something from the shop and say that you want to return it as soon as you get it.
Being a dropshipping kind of shop, the product will have to be sent back to the wholesaler and they will have to provide you with their name, address, and all of their details.
7. Do not be afraid to change your supplier
If you are working with a supplier and things are not going well, just change to another.
When selling products using dropshipping, you cannot allow yourself to have any problems regarding shipping, stock, or any other related services.
You should request that all the products are sent the same day that the order is placed. Analyze all the products they offer you, compare them to those sold by your competitors, and never stop looking for new suppliers.
Errors like not having that new product that just came out or having too long of a delivery time could ruin your e-commerce shop. Worse yet, it will be all your supplier’s fault.
8. Establish how you are going to position yourself in the market
Define your strategy, establish an action plan, and go to great lengths to accomplish it.
Let’s get searching!
Now you have all the information that you need to look for the best dropshipping suppliers, no matter where you are.
Start looking and launch your online store before your market niche is all dried up. If you find good suppliers, please leave a comment and share your experience with us!